Awake at 2 o'clock?

The economy has experienced 5 consecutive quarters of growth. We are officially more than a year past the end of the recession.

I’m guessing that you, like me, responded to that fact with something like “HA!.” We all still feel it. Every small business owner knows, in his or her bones, that the problems aren’t over. It isn’t 2006. In fact, it isn’t 2003, or 1997, or anything like what a healthy economy felt like.

I’ve had a dozen owners tell me the same thing over the last few weeks. They are doing a bit more business, but they are personally working harder than they have in years. They’ve cut staff to the bone, and don’t feel confident enough to hire. They don’t have the financial reserves (or the margins) to risk on expanding their workforce, and they aren’t sure enough of the staying power of any recovery to chance it.

They are also facing a psychological barrier to hiring.

Most business owners feel a responsibility to their employees. Although I don’t agree with the whole “employees are family” model, there is some inevitable paternalism (or maternalism) in providing people with the income that sustains their spouses and children. That’s the reason why most business owners are terrible interviewers. They spend much of their time telling prospective employees why theirs is a great company to work for.

The Great Recession did more than just cripple the growth plans of millions of small businesses. It hit us psychologically. Most of us had never laid off anyone before. It was our first experience in telling someone that we had failed as a parental figure. The security and income we had promised was no longer there, and we couldn’t do anything about it.

It damaged us not just financially, but in our perception and self-image as providers. Now we are gun shy. We don’t want to have to go through that again.

Instead of sitting with a prospective employee and describing the wonderful things we are going to do to change his life, we are offering a job with the full knowledge that we may not be able to keep up our end of the deal. We are mortal, and we don’t know, absolutely know, that we can promise that job indefinitely. We have to hedge our bets. We aren’t as confident. We want them to depend on us…but not too much.

The government recognizes that small business has to hire to stimulate growth. (I won’t start now on why loans don’t create small business hiring.) Right now the Federal Reserve predicts that hiring won’t reach absorption levels (meaning the unemployment rate will start to decrease substantially) until the second or third quarter of 2012.

Eighteen months of working long hours and sacrificing personal life is more than most people would accept, but small business owners can do it while standing on their heads. Our tenacity and fortitude is great for survival, but lousy for the economy.